Previous SectionIndexHome Page

Mr. Adrian Bailey (West Bromwich, West): I wish to speak to new clause 4, which is in my name and that of my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase). However, consistent with the declaration that I made on Second Reading, I must make it clear that I have a long association with the co-operative movement. It employed me for many years before I came into the House. I am also proud to declare that I am a member of the Labour and Co-operative group.

New clause 4 is a probing amendment that is designed to consider the arguments and raise the issue with my hon. Friend the Paymaster General, so that we can clarify ministerial thinking. I shall not press the new clause to a vote.

We have much sympathy with the comments made by the right hon. Member for East Yorkshire (Mr. Knight) and the hon. Member for Christchurch (Mr. Chope). The issues that they raised are seriously regarded in the co-operative movement and are a source of great concern to those who wish to set up new co-operative or community-based organisations. The difference between a company and a co-operative in the fees charged by the FSA for registration is undoubtedly a serious disincentive. The issue needs to be considered and the hon. Gentlemen were right to raise it in their discussion of new clause 3. However, I do not think that they have considered the full implications of their new clause.

The FSA's argument has been well rehearsed. It is a self-financing organisation and, if the fees charged to industrial and provident societies were reduced, it would have to compensate for the loss of that financial stream by increasing levies on other forms of companies. It is also maintained that, because of the complexity and the need to monitor continually the rules for industrial, co-operative and provident societies, the individual societies that have registered require a higher level of scrutiny and supervision from the FSA than is required of individual companies. That, of course, results in greater expense.

However, if new clause 3 were accepted, there would be an enormous and unintended windfall for some of the larger co-operative and mutual organisations. For example, the Co-operative Group, which controls the Co-operative Insurance Society and the Co-operative Bank, would receive an enormous windfall if its registration fees were reduced. The FSA would have to make up that enormous financial deficit from other sources.

If we looked at the range of other major co-operative retailing organisations and housing co-operatives, much the same would be true. That is basically the reason for this new clause. It is designed, first, to provide a mechanism by which organisations considering setting up

19 Apr 2002 : Column 827

a business along co-operative lines would not be deterred by the initial level of registration fees. It is also designed to ensure, however, that there is a level playing field between those larger co-operative organisations and companies and, to provide fairness to the FSA, to ensure that financial difficulties would not be incurred as a result of potential changes in income stream. I stress that I shall not press this new clause to a vote.

10.30 am

Mr. Butterfill: Although I do not have a direct interest to declare, I am a vice-chairman of the all-party group on building societies and financial mutuals, and I have a long history of supporting mutual activity in this country. Unless we include measures such as the new clause, we are in danger of putting obstacles in the way of mutuality, which the Government would not intend and which would compound the already difficult position in which mutuality finds itself in the United Kingdom.

In many ways, it is curious that, although this country was the cradle from which mutuality sprang, it has been less successful here than it has, for example, across the Atlantic in Canada and in the United States. It may be that Governments there have created a more benign environment in which mutuality can flourish. That is what this Government—perhaps of all Governments—should be doing in relation to this new clause and this Bill. It seems absolutely extraordinary that we should suggest that mutual societies of this nature should pay fees that are substantially higher than those paid by companies that are largely set up to make profits.

One of the things that we need to do in this country is to encourage people to work together in their communities for their mutual benefit. That is precisely what these societies do. Similarly, in relation to savings organisations, it is important that we encourage mutual savings organisations to flourish. Building societies used to perform that function as the principal providers of mutual savings. I regret, however, that the activities of the carpetbaggers and other very greedy people have meant that the building societies movement in this country has been significantly diminished. The friendly societies have not taken off as we would like, and mutual savings organisations of all types have found it difficult to set themselves up. The Government should be assisting them and providing financial support for this type of activity. If the Government are serious about dealing with the problems of financial exclusion, which I believe that they are—at least, they have that intention—it is essential that they should do that.

First, I do not believe that it is necessary for the FSA to provide for the level of charges that has been mooted simply to have an annual renewal of registration. We return to the argument that, if the Department of Trade and Industry can do it for £15, why cannot the FSA? It may be that the DTI is subsidising the costs of companies, in which case we must ask why that should be the case, and whether it is right that companies should be subsidised by the DTI. If the DTI is not subsidising those companies, however, we must ask what is the difference with the FSA. It is up to the FSA to make a case and to say, "We need this level of charge." If they genuinely need such a level of charge, it must be right for the Government to consider a Treasury subvention to support

19 Apr 2002 : Column 828

it. Given that the Government must believe that this is a correct thing to do, it must equally be right for the Government to consider the possibility of subvention to support this type of activity. I very much support the new clause.

Mr. Purchase: I have always been associated with the co-operative cause, but, for the avoidance of doubt, may I once again declare an interest in that the co-operative movement supports my constituency party financially each year.

Having said that, it is once again a pleasure to follow the hon. Member for Bournemouth, West (Mr. Butterfill), whose measured tones bring a much-needed insight to these debates. I fear that I cannot be as calm, as collected and as incisive. I believe that we are dealing with an unintended consequence—the people who have drafted the regulations for the FSA and industrial and provident societies have been unaware of the effect that their drafting would have on an important part of the social economy as a whole.

My father and I, for more than 70 years, have been members of working men's clubs. In my opinion, working men's clubs have always been pleased to pay their way, and have always met the costs of their organisation in an honourable fashion. A burden is being imposed on clubs and on small societies and community groups. I am proud to be associated with several community groups that have registered their organisations in a proper and legal way—companies limited by guarantee and so on—and they will find themselves burdened with an excessive cost of filing each year for re-registration.

This is not necessarily the appropriate Bill in which to introduce this new clause. However, this is an opportunity to say to the Minister, loudly and clearly, that something has to be done to right this wrong—for that is what it is. Whether it is an unintended consequence or not, those who drafted the legislation are disconnected from the everyday experience of ordinary people helping our society and our communities at the micro-level. Those people help to build up the feeling of solidarity in society, and they must not be treated in this way.

I accept that this new clause will not find favour with the Minister at this time, but she must ensure that the protestations that we have heard today are taken forward and dealt with appropriately and effectively. We must receive an undertaking today that that will be done.

Mr. Gareth R. Thomas: I have considerable sympathy for the comments made by the right hon. Member for East Yorkshire (Mr. Knight) and by my hon. Friends the Members for West Bromwich, West (Mr. Bailey) and for Wolverhampton, North-East (Mr. Purchase), and for the broad thrust of the comments made by the hon. Members for Bournemouth, West (Mr. Butterfill) and for Christchurch (Mr. Chope).

As has been indicated, this issue was raised on Second Reading, and my hon. Friends the Members for Corby (Phil Hope) and for Stroud (Mr. Drew) also highlighted their concern. The hon. Member for Christchurch was good enough to give me the opportunity during his speech on Second Reading to place on record my concern about these fees. During the consultation that I have undertaken in preparation for this Bill, and during discussions prior to this stage of deliberations on it, a number of sponsoring

19 Apr 2002 : Column 829

bodies of industrial and provident societies made representations to me about the level of fees. The WI Country Markets, the Village Retail Services Association, to which the hon. Member for Christchurch referred, the committee of registered clubs, which a number of my hon. Friends flagged up, and the Rugby Football Union are worried about the high cost of the registrations charges. I share the general view that the Financial Services Authority needs to act speedily to reduce the fees that it intends to charge from 1 July. As the hon. Member for Christchurch said, I have organised to see the FSA on Monday, partly as a result of discussions with him and the sponsoring bodies. I invite all hon. Members who are concerned to speak to me later. They are more than welcome to attend the meeting.

Although the reference to companies in the new clauses is illuminating in that it allows us to highlight the substantial difference between the charges for the registration of companies and of industrial and provident societies, it is slightly confusing. There is no monitoring regime for companies like that traditionally carried out for industrial and provident societies by the registrar of friendly societies. One reason for the monitoring is that industrial and provident societies hold community or even possibly public assets. The comparison with companies is inappropriate because the regulator has a more active role in approving changes and in monitoring the work and operation of the industrial and provident societies.

It is worth explaining to my hon. Friend the Member for West Bromwich, West and the right hon. Member for East Yorkshire that prior to the FSA taking over responsibility for regulation, fees for the registration of new rules or amendments to the constitution of industrial and provident societies were higher than the comparable charges for companies.

Next Section

IndexHome Page